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1
The Elements of a Policy Statement on Section 5
Ne il W. Ave ritt
T
The antitrust side of Section 5 of the Federal Trade Commission Act—which prohibits “unfair meth-
ods of competition”—has long resisted attempts to define it more precisely. In 2008, the Commis-
sion convened a workshop,1 with support from Commissioners Jon Leibowitz and J. Thomas
Rosch, with the goal of developing more insights, consensus, and structure around the statute. As
time went by, however, no report or written guidance emerged from the Commission, and even a
minimal consensus appeared beyond reach. Congress began to express alarm about the lack of
transparency in agency thinking. On June 19 of this year, Commissioner Joshua Wright unveiled
a proposed policy statement in an effort to prompt the start of discussions. A few weeks later on
July 25, Commissioner Maureen Ohlhausen gave a speech outlining her thoughts on the principles
that might go into such a statement. FTC Chairwoman Edith Ramirez has not responded formally
䡵
Neil W. Averitt is
to these invitations; instead, she has proposed leaving Section 5 guidance to a process of caseby-case development. The issue within the Commission remains as stymied as ever.
a member of the
Massachusetts Bar
and is a columnist for
FTC:Watch. He was the
principal author of the
Whatever precise form the agency action eventually takes, a relatively short, centrist declaration of policy that will clarify the core features of Section 5 is needed. The declaration should indicate that Section 5 is intended to be broader than the Sherman and Clayton Acts, and that it can
be applied more broadly in ways that usefully address some real competitive issues but it has
identifiable limits and does not authorize a general interest-balancing power to do good.
Commission’s 1980
policy statement on
This article reviews the current debate about a policy statement to define Section 5 and proposes both general principles and specific language that might go into such a statement.
consumer “unfair acts
or practices” and of the
opinion in International
Harvester, which
formally adopted that
The Current Proposals
Each of the current suggestions for Section 5 guidance has given us important insights on the role
of the statute, but none of them has been sufficiently comprehensive or sufficiently attentive to the
agency’s overall architecture to provide a fully satisfactory approach to the subject.
statement. This article
Commissioner Wright began the current debate when he proposed his own draft policy state-
has profited from the
ment on Section 5,2 accompanied by an explanatory speech to the leadership of the New York
thinking of many other
State Bar Association.3 He acknowledged that Congress intended Section 5 to reach beyond the
writers, including
Richard Craswell,
Sherman and the Clayton Acts. He also suggested, however, that the imprecise scope of the
statute had created significantly harmful uncertainties for business. Commissioner Wright’s pro-
William Kovacic, Robert
Lande, Tim Wu, and
Marc Winerman; their
1
See Fed. Trade Comm’n, Section 5 of the FTC Act as a Competition Statute (Oct. 17, 2008) (workshop materials online) [hereinafter FTC
Section 5 Workshop], available at http://www.ftc.gov/bc/workshops/section5/index.shtml.
substantial help is
2
gratefully acknowledged.
The views expressed
Joshua D. Wright, Comm’r, Fed. Trade Comm’n, Proposed Policy Statement Regarding Unfair Methods of Competition Under Section 5 of
the Federal Trade Commission Act (June 19, 2013), available at http://www.ftc.gov/speeches/wright/130619umcpolicystatement.pdf.
3
Joshua D. Wright, Comm’r, Fed. Trade Comm’n, Section 5 Recast: Defining the Federal Trade Commission’s Unfair Methods of Competition
here are solely the
Authority, Remarks at the Executive Committee Meeting of the New York State Bar Association’s Antitrust Section (June 19, 2013), avail-
author’s own.
able at http://www.ftc.gov/speeches/wright/130619section5recast.pdf.
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䡵 October 2013
2
posed policy statement would therefore impose two new limiting standards on a Section 5 action.
The challenged conduct must harm competition in a strict economic sense, generally, as demonstrated through “increased prices, reduced output, diminished quality, or weakened incentives to
innovate.” 4 The conduct must also involve actions that produce no cognizable efficiencies; if it
does, then it can be challenged only under one of the other antitrust statutes.
Although Commissioner Wright’s proposal must be given credit for highlighting the need to better define Section 5, it suffers from four problems: First, it identifies very few “harms to competition” that are not already Sherman Act violations, thus undercutting the purposes of the statute.
Even the proposed statement’s example of incipient harm to competition involves a firm that
already possesses “market power,” and so is likely to be within the monopolization law. Second,
the proposed efficiencies screen would, as a practical matter, preclude virtually all Section 5
Whatever precise form
actions. Almost any conduct, no matter how harmful, produces some genuine collateral efficiencies and, in the absence of any rule of reason balancing test, that fig leaf will be sufficient to pre-
the agency action
vent Commission action. Third, the proposed statement does not consider less disruptive ways of
eventually takes,
of external references such as asking whether the anticompetitive conduct also violates some
dealing with the real problems of business uncertainty. It does not, for example, consider the use
external standard of business conduct. Fourth, the proposed statement seems too one-sidedly
a relatively short,
sensitive to the risks of over-inclusive enforcement and fails to balance this risk against those to
centrist declaration of
referred nine separate times to the need to avoid “deterring consumer welfare-enhancing busi-
consumers from under-inclusive enforcement. In his introductory speech, Commissioner Wright
ness practices.” 5
Commissioner Wright’s fellow Republican Commissioner Ohlhausen picked up his call in a
policy that will clarify
major speech the following month to the U.S. Chamber of Commerce.6 She also urged the agency
the core features of
to issue “some type of policy statement or other guidance on how and when [it] will pursue standalone Section 5 cases.” 7 In lieu of a draft of such a statement, she instead offered a set of six prin-
Section 5 is needed.
ciples or screens in an appendix to her written remarks. A Section 5 action would be appropriate,
she suggested, only when it addresses harm to “competition or the competitive process” rather
than to individual competitors; when the competitive harms are “disproportionate” to the benefits
realized; when no other agency is in a better position to address the problem; when the
Commission has acquired “substantial expertise” before challenging conduct as a new violation;
and when a firm can be given sufficient guidance to know before the fact that its conduct might
be challenged.8 Some areas––such as invitations to collude and facilitating practices––are likely
to meet all these criteria. But Commissioner Ohlhausen also added a final principle that would
direct the agency toward a primary focus on other parts of the FTC Act. She suggested that when
the agency seeks to pursue innovative tasks, it could more profitably focus on non-litigation tools
such as research, reports, and advocacies that will improve the quality of mainstream antitrust
analysis. Section 5, she thought, “should not play a significant part in the FTC’s competition
enforcement efforts.” 9
4
Wright, supra note 2, at 7.
5
See Wright, supra note 3.
6
Maureen K. Ohlhausen, Comm’r, Fed. Trade Comm’n, Section 5: Principles of Navigation, Remarks to the U.S. Chamber of Commerce (July
7
Id. at 1.
8
Id. at 7–8.
9
Id. at 19.
25, 2013), available at http://www.ftc.gov/speeches/ohlhausen/130725section5speech.pdf.
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Commissioner Ohlhausen’s speech was also a helpful effort to move the discussion forward, but
it too suffers from a number of difficulties: First, her proposed Section 5 standard of “disproportionate” harm—although less restrictive than Wright’s requirement for no efficiencies at all—is still
narrower than the neutral rule of reason balancing that is the general coin of the realm for antitrust
analysis. Second, her proposal downplays the possible importance of business torts as an area of
Section 5 action, acknowledging in principle that they might harm competition even if they do not
create individual market power, but then caricaturing the issue as an effort to “require businesses
to play nice with each other.” 10 Third, the proposed construction of Section 5 does not have a suitable overview of the relationships between antitrust and consumer protection law. Thus it suggests
that deception of a standard-setting organization should be pursued under the Sherman Act as
monopolization, but does not consider the simpler possibility of pursuing it as deception under the
consumer protection side of Section 5. Fourth, the proposal invites new dangers by looking too
closely for other agencies or private litigants that may be better placed to handle an issue. An
awareness of these alternatives is reasonable and helpful, but if carried too far it can lead to a
jurisprudence of self-help that gives preferential treatment to wealthy litigants or to a diffusion of
responsibility among agencies that invites a repeat of problems such as the unsupervised mortgage meltdown of 2008.
FTC Chairwoman Edith Ramirez favors a different course entirely. Rather than developing a
comprehensive statement on how Section 5 is construed, she prefers to let the law and guidance
both develop through case-by-case adjudication. This was made clear in the follow-up to last
April’s antitrust oversight hearings. Republican Senator Michael Lee from Utah asked her, “Why
are you resistant to provide [Section 5] guidance in a more comprehensive, published form upon
which the business community and others can meaningfully rely?” 11 She replied by making the
case for an alternative approach:
Case-specific guidance, grounded in detailed facts and sound economic theory, is likely the most useful form of guidance for the business community and lawyers advising the business community. Due
to the fact-based nature of antitrust cases, as well as our need to retain flexibility to use Section 5 to
protect competition and consumers as markets and economic learning evolve, any non-case-specific guidance document would necessarily be far more general, and thus less useful.12
The course proposed by Chairwoman Ramirez presents, however, its own set of problems: First,
common law development of Section 5 is not likely to yield effective guidance because the cases
are too infrequent for precedents to accumulate rapidly enough. Second, the lack of an articulated overall vision will hurt the agency in the courts of appeals because the courts will not have confidence that the agency is entitled to Chevron deference in its construction of its statute.13 Third,
the lack of guidance will inhibit the Commission’s own lawyers and may leave some competitive
problems unaddressed even if they might be within the reach of innovative theories. Fourth, the
lack of guidance may also leave the agency vulnerable to political scare tactics. Business exec-
10
Id. at 18.
11
Oversight of the Enforcement of the Antitrust Laws: Hearings Before the Antitrust Subcomm. of the S. Comm. on the Judiciary, 113th Cong.
12 (2013) (statement of Edith Ramirez, Chairwoman, Fed. Trade Comm’n), available at http://www.judiciary.senate.gov/resources/docu
ments/113thCongressDocuments/upload/041613QFRs-Ramirez.pdf.
12
13
Id. at 12.
See Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 843, 865 (1984) (finding that courts should defer to an agency’s own construction of a statute committed to its administration as long as this involves “a permissible construction of the statute” and the agency
“considered the matter in a detailed and reasoned fashion”).
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utives can plausibly claim to have been confused and inhibited from beneficial actions even if
those claims are exaggerated.14 (5) Ultimately, the case-by-case approach casts needless doubt
on the agency’s effectiveness as an ongoing institution. If it cannot derive general principles even
after having had 99 years of experience with Section 5, when will it be able to do so?
So, all things considered, it seems that none of the current efforts to clarify the purpose and
scope of Section 5 is fully satisfactory and that the Commission should continue to think about
other ways of providing guidance.
General Principles for Construing Section 5
Before turning to the specifics, it seems useful to pause and try to identify general principles that
might guide a successful statement.
Seven principles seem particularly fundamental:
1. As a starting point, Section 5 was intended by Congress to be significantly broader than the
Sherman and Clayton Acts in at least some respects. The wisdom of any particular extension is
naturally open to debate. However, the debate should begin by recognizing the task that Congress
gave the agency.
2. The agency is charged with identifying and addressing any form of conduct that is unreasonably harmful to competition. The agency’s mission is limited to these competitive harms; the
search for “unfair” methods of competition does not authorize inquiry into social or moral values.
But within the competition universe, the agency is instructed to address competitive harms regardless of the particular form they take. Cognizable harm may involve an immediate injury to the
process of price competition, or injury to nonprice competition in terms of quality or innovation, or
reasonably foreseeable injury to future competition.
3. This inquiry will sometimes lead to condemnation under Section 5 of conduct that is essentially similar to a Sherman or Clayton Act violation, but that nonetheless would not be condemned
under those statutes. For example, the Commission might find that certain conduct is likely to lead
to outright collusion or monopolization in the reasonably predictable future, even if it does not do
so immediately. The legislative history on this power is clear and emphatic.
4. The Commission should nonetheless be slow and sparing in this use of Section 5. Aggressive pursuit of such theories will result in situations where the same conduct is judged differently,
depending on which antitrust agency handles the matter. That is a part of the congressional plan,
of course. But it nonetheless makes for difficulties in business planning and counseling. And it will
be appropriate only in a finite number of cases because the Sherman and Clayton Acts have been
judicially expanded over the years so as to reach most applications of real concern.
5. A more important role for Section 5 is to reach forms of competitive harm that are different
in kind from Sherman and Clayton Act violations rather than different only in degree. These can
include situations in which competition, while remaining intense in some respects, has been
diverted into channels that are less beneficial to consumers, such as through the use of misrepresentations, abuse of a regulatory process, commercial bribery, or industrial espionage.
6. Attention to such matters will lead the Commission to refer to other bodies of business law,
such as state laws on business torts, as long as the conduct also has market-wide competitive
effects. This does not need to imply an undesirable duplication of enforcement effort, but can
14
While the FTC has achieved a number of useful settlements on issues like invitations to collude, it has not won a litigated court case relying solely on its competition authority under Section 5 since the “tires, batteries, and accessories” cases of the 1960s. See, e.g., FTC v.
Texaco Inc., 393 U.S. 223 (1968). It seems unlikely that businesses are deeply inhibited by concerns about the statute.
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instead lead to a beneficial integration of business laws that will lead to greater predictability. It
can also help to prevent diffusion of responsibility among agencies, inaction, and enforcement
gaps.
7. The most important single body of external law is the Commission’s own consumer protection authority under the other half of Section 5. The Federal Trade Commission is a single agency,
applying a single statute, and it should take this occasion to lay out an integrated vision of its mission. The two halves of Section 5 can be shown to work together to protect a market economy that
is responsive to consumer choice: antitrust protects the array of options in the marketplace, and
consumer protection then safeguards the ability to select among those options. Pointing out this
overall architecture of the statute will have several benefits for the agency. It will provide a framework for defining the proper scope of each part of the FTC Act, will suggest when particular matters should be assigned to one or the other side of the statute, and will demonstrate a systematic vision that will make the agency’s construction of its statute more persuasive to the courts of
appeals.
A Proposed Policy Framework for Defining “Unfair Methods of Competition”
Effective guidance will require turning these general principles into a short written statement for
the antitrust bar and for the FTC itself. That guidance will put the agency formally on record as to
how it interprets the prohibition against “unfair methods of competition.” 15 The agency’s statement
should describe the areas in which Section 5 is applicable, and also the limitations that it believes
are contained in the statute. The analytical elements that are identified in the statement will be the
product of the Commission’s experience in applying the statute in a wide variety of circumstances.
Guidance can also incorporate the agency’s learning from case law and commentary, including
contributions made by participants in the Commission’s 2008 workshop on Section 5.16
Legislative History and Early Case Law. Congress enacted the FTC Act in 1914 primarily in
response to concerns that the Sherman Act would not reach all business practices that were
harmful to competition. Section 5 was therefore made broader than other trade statutes. One of
the Act’s principal sponsors noted that it was intended to “make some things punishable, to prevent some things, that can not be punished or prevented under the [Sherman] antitrust law.”17 The
legislative history makes clear that Congress wrote the act broadly as a conscious choice
because “there were too many unfair practices to define, and after writing 20 of them into the law
it would be quite possible to invent others.”18 To apply this general standard, Congress created a
specialized agency with broad discretion and then determined to “leave it to the [C]ommission to
determine what practices were unfair.”19
15
Section 5 begins with the following language: “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful. The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations . . . from using unfair methods of competition in or affecting commerce.” 15 U.S.C. § 45(a) (listings of certain
exempt industries omitted).
16
See FTC Section 5 Workshop, supra note 1. Any new policy statement should be limited to unfair competition matters. It should not address
the issues involved in interpreting “unfair or deceptive acts or practices” under Section 5 or modify any existing policy statement addressing those issues. Nor should any statement affect Commission competition activities taken pursuant to other statutes, such as Section 7
of the Clayton Act, or the Horizontal Merger Guidelines that interpret Section 7.
17
51 CONG. REC. 12,454 (1914) (statement of Sen. Albert B. Cummins).
18
S. R EP. N O . 63-597, at 13 (1914); see also H.R. R EP. N O . 63-1142, at 19 (1914).
19
S. R EP. N O . 63-597, at 13 (1914).
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Congress also set some specific limits on the Commission’s discretion, however. An “unfair”
method is to be defined by its effects on competition, not through an assessment of its moral or
other qualities.20 A Commission action must also be in the public interest; the agency is not to take
part in private disputes.21 And finally, to compensate for the breadth of its discretion, the new
Commission was given correspondingly limited remedies, primarily centered on injunctions and
orders to guide future conduct.22
The subsequent case law has confirmed both the breadth and the boundaries inherent in this
history. In FTC v. Indiana Federation of Dentists, the Supreme Court noted that “the unfair methods of competition” language in Section 5 encompasses “not only practices that violate the
Sherman Act and the other antitrust laws, but also practices that the Commission determines are
against public policy for other reasons.” 23 At the same time, other courts have emphasized the
[C]ourts have
importance of maintaining conceptual rigor and predictability in the Commission’s analysis.
Businesses must not be “left in a state of complete unpredictability.” 24
An effective policy statement will need to show how the Commission approaches the task of
emphasized the
harmonizing these two goals.
Relationship with Other Statutes. Defining an “unfair method of competition” can be made eas-
importance of
ier by taking account of the context in which this statutory language appears. The nature of the
maintaining conceptual
Commission’s responsibilities under this provision are best understood in light of the other work
of protecting the competitive process, conducted by the Commission and by others, under other
rigor and predictability
adjacent statutes.
One such set of relationships is found with the Sherman and Clayton Acts. Section 5 was
in the Commission’s
intended to go beyond those statutes in certain ways, but also to take them as a starting point for
analysis. Businesses
stantive concepts of the Sherman Act, as will be discussed below.
analysis. Some applications of Section 5 are therefore defined by their relationship with the subAnother set of relationships is found with state trade regulation statutes. Congress anticipated
must not be “left in a
that the Commission would make reference to “the decisions of the courts,” 25 and the Supreme
Court has noted that the agency can take account of “the common law and criminal statutes.” 26
state of complete
If conduct that implicates state business practice statutes also harms competition within the
meaning of the FTC Act, then the reach and boundaries of the state statutes can be relevant
unpredictability.”
sources of insight, as will also be discussed below.
Most fundamentally, the term “unfair methods of competition” is shaped by its setting within the
larger context of the FTC Act as a whole. The Act in its entirety works to protect a market economy that is responsive to consumer choice. Such an economy requires two basic conditions: an
20
21
See 51 C ONG . R EC . 12,220 (statement of Sen. Francis G. Newlands) (the “legal significance is the same as the economic significance”).
See FTC v. Klesner, 280 U.S. 19 (1929); 51 C ONG R EC . 11,104–05 (remarks of Sen. Albert B. Cummins) (the bill is “not simply trying to
protect one man against another;” an unfair method must involve “something that has a tendency to affect the people of the country or be
injurious to their welfare”).
22
See 51 C ONG R EC . 11, 111–12 (statement of Sen. Francis G. Newlands) (explaining decision not to include “extreme penalties” in the FTC
Act on grounds that rights and duties under that legislation would be continuously evolving).
23
FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 454 (1986) (dictum); see also FTC v. Sperry & Hutchinson, 405 U.S. 233, 239 (1972)
(Commission empowered “to define and proscribe an unfair competitive practice, even though the practice does not infringe either the letter or the spirit of the antitrust laws”).
24
E.I. du Pont de Nemours & Co. v. FTC (Ethyl ), 729 F.2d 128, 139 (2d Cir. 1984).
25
5l C ONG . R EC . 13048 (statement of Sen. Albert B. Cummins).
26
FTC v. R.F. Keppel & Bro., 291 U.S. 304, 313 (1934).
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array of options in the marketplace for consumers to select among and an ability on the part of
consumers to make that choice in a free and informed manner. The Commission’s consumer protection authority protects the ability of buyers to make these purchase decisions and selections.
Its unfair competition authority protects the initial array of marketplace options. An unfair method
of competition can therefore be thought of as conduct that unreasonably diminishes the array of
market options within the meaning of this plan.27
The Elements of “Unfair Competition.” More specificity is needed in order to turn this general
concept into an operational definition of unfair competition. That specificity can be grounded in a
review of the case law and the record of the public workshop that the Commission held to discuss
these issues. Synthesizing this material, I would suggest that an unfair method of competition has
three formal legal elements: (1) a definable harm to competition; (2) competitive techniques that
An unfair method of
are wrongful in the sense that they are not competition on the merits; and (3) an overall result that
is harmful to consumers in its net effect. There is also a fourth consideration—predictability—
competition requires,
which is not a formal part of the legal offense, but should be an important policy goal nonetheless.
first of all, conduct that
Element 1: Harm to Competition
in some way concretely
An unfair method of competition requires, first of all, conduct that in some way concretely harms
harms competition
take any of several forms.
competition or that poses an unreasonable risk of harming it in the future. Cognizable harms can
Violations of the Sherman and Clayton Acts. Conduct that would violate the letter of the
or that poses an
Sherman or the Clayton Acts will automatically involve sufficient competitive harm to satisfy the
unreasonable risk of
enforce the Sherman Act directly, so all FTC challenges to conduct that would violate that statute
standards of the more inclusive FTC Act as well. The Commission does not have jurisdiction to
are necessarily brought under the authority of Section 5.28 The Commission is specifically authorharming it in the future.
ized to enforce the Clayton Act, so most actions involving those theories of liability will be brought
directly under that statute. The agency still has the option of proceeding under Section 5 instead,
however.29
Example 1: Competing x-ray laboratories agree about the terms on which they will do business
with insurance companies. The FTC can pursue this conduct as an unfair method of competition even though others with direct jurisdiction under the Sherman Act might challenge it under
that statute instead.
27
The Commission has described the interaction among the components of the FTC Act in the following terms:
The various components of the statute form an integrated whole, allowing the Commission to promote the diverse benefits of a free and open
economy. Thus the ban on unfair competition prevents exclusionary or anti-competitive behavior and helps preserve a full variety of marketplace options for consumers to choose among; the ban on deception helps ensure that consumers will not make that choice on the basis of
misleading information; and the ban on unfair practices ensures that the choice is not distorted by coercion, the withholding of material information, or similar practices. Safeguards at all three levels are needed to ensure that substantial consumer injury is adequately addressed.
Companion Statement on the Commission’s Consumer Unfairness Jurisdiction, 4 Trade Reg. Rep. (CCH) ¶ 13,203 at 20,909-3 (1980). For
a concrete application of these distinctions see, e.g., International Harvester, 104 F.T.C. 949 (1984). This general plan also contains some
particular exceptions and qualifications that may affect, for example, the treatment of privacy issues on the consumer protection side of the
statute; those topics are not addressed here.
28
See FTC v. Cement Inst., 333 U.S. 683, 690–93 (1948); FTC v. Pac. States Paper Trade Ass’n, 273 U.S. 52 (1926).
29
See Fashion Originators’ Guild v. FTC, 312 U.S. 457, 464 (1941).
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Example 2: Two supermarket chains agree to a merger. In cases where Section 7 of the Clayton
Act covers all significant aspects of the transaction, the FTC will normally proceed under that
statute rather than acting under Section 5.
Technical evasions of the antitrust statutes. The Commission can also use Section 5 to fill technical gaps in the coverage of the Sherman and Clayton Acts. A “technical gap” exists in this sense
where the underlying statute does not literally apply to a particular situation, but where the conduct still has all the same substantive characteristics as a statutory violation and where there is
no clear indication that Congress intended to provide an exemption in the circumstance involved.
A commonly cited example of this situation is the invitation-to-collude case.30 Section 5 can apply
in these situations to fill the gap. The competitive harm that would have justified application of the
original statutes, had the gap not existed, should be sufficient to satisfy Section 5 as well.
Example 3: A maker of vehicle axles invites a competitor to agree with it on prices, but the competitor declines. The firm’s conduct would have made it liable for price fixing if its offer had been
accepted. The Sherman Act forbids actual collusion and attempted monopolization, but not
attempted collusion. The FTC can nonetheless reach the invitation under Section 5, because
doing so does not turn previously innocent conduct into a violation.31
Example 4: An automobile manufacturer discriminates among the operators of car-rental fleets
in the lease rates it charges. The Robinson-Patman Act prohibits discriminations in price. The
FTC could not reach this situation on a theory of a technical gap because doing so would alter
the nature of the conduct that is prohibited from selling to leasing.32
Incipient violations of the antitrust statutes. The Commission’s authority under “unfair methods
of competition” should also cover conduct that is not presently a violation of one of the other antitrust statutes but that appears likely to result in such a violation in the foreseeable future. This is
one of the best documented goals of Section 5. “A major purpose of [the FTC] Act was to enable
the Commission to restrain practices as ‘unfair,’ which, although not yet having grown into
Sherman Act dimensions, would most likely do so if left unrestrained.” 33
Under this theory, the Commission’s task is essentially predictive. What conduct is being used,
and what effect is it likely to have at different times in the future? In making this prediction the
Commission can look at two possible mechanisms by which consequences can grow: increasing
consequences of the conduct in the hands of the originating firm and a possible spread of the
conduct as other firms in the industry begin to copy it.
30
See, e.g., Valassis Commc’ns, 141 F.T.C. 247 (2006); Precision Moulding, 122 F.T.C. 104 (1996).
31
See also Grand Union Co. v. FTC, 300 F.2d 92 (2d Cir. 1962) (inducing the grant of discriminatory promotional allowances, which would
have been illegal for the supplier to give); Cf. Quality Trailer Prods., 115 F.T.C. 944 (1992).
32
The change in substance means that the gap is no longer merely “technical,” and that it can therefore no longer be addressed under this
particular narrow application of Section 5. See Foremost-McKesson, Inc., 109 F.T.C. 127, 129–30 (1987) (explaining General Motors Corp.,
103 F.T.C. 641, 696, 700–01 (1984)). It is still possible that substantively different conditions can be reached through the broader Section
5 purpose of enforcing the underlying policy of the Sherman Act. That will require a more elaborate assessment of whether Congress intended to distinguish between the two situations, as will be discussed below. An extension to leasing situations would not appear to be warranted under either theory, however.
33
Triangle Conduit & Cable Co. v. FTC, 168 F.2d 175 (7th Cir. 1948), aff’d by an equally divided Court sub nom. Clayton Mark & Co. v. FTC,
336 U.S. 596 (1949). See also FTC v. Motion Picture Adver. Serv. Co., 344 U.S. 392, 394–95 (1953) (“It is . . . clear that the Federal Trade
Commission Act was designed to supplement and bolster the Sherman Act and the Clayton Act—to stop in their incipiency acts and practices that, when full blown, would violate those Acts.”).
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There are also two limitations on this theory. One is the time horizon beyond which predictions
can no longer be made with sufficient confidence. A second limitation comes from the nature of
the underlying reference statute. If a substantive statute already contains an incipiency element,
then the Commission will not usually use Section 5 to introduce a different standard of incipiency
that will look still further into the future.
Example 5: After a long and careful study of certain basing-point prices, the Commission concluded that they had harmful effects, one of which was that their unilateral use increased the
likelihood of collusion in a market. When the Commission banned their use in the electrical conduit industry, the Seventh Circuit upheld the order on the basis of that incipient effect.34
Example 6: A coffee manufacturer is charged with using predatory pricing in an effort to attain
monopoly power. After investigation, the Commission concludes that the firm is not guilty of
[S]ome Sherman Act
attempted monopolization. A charge of incipient monopoly under Section 5 will be dismissed
as essentially duplicative.35
purposes may now
Violations of the policy of the Sherman or Clayton Acts. Some conduct takes forms that are simneed to be protected
ilar to Sherman and Clayton Act violations, and may operate through similar mechanisms and
have similar consequences, but nonetheless does not come within the scope of those prohibitions.
through the uniquely
These situations are not the same as the technical gaps because here the conduct is substantively
different from that prohibited under the letter of the Sherman and Clayton Acts. Section 5 should
governmental actions
still reach these situations, however, if doing so will fulfill the policy or purposes of the underlying
statute. In one such case, for example, a firm had made a potentially anticompetitive acquisition
under Section 5.
through a series of transactions structured so that there may have been no horizontal overlap at
the time of the final closing. The conduct was nonetheless successfully challenged as a violation
of the policy of the Clayton Act merger provisions.36
This use of Section 5 may become increasingly important as a result of changes in the interpretation of the Sherman Act itself. At one time an argument might have been made that the
Sherman and Clayton Acts could be flexibly applied so as to fully carry out their own policies, so
that there was no need for a supplemental statute such as Section 5. In recent years, however,
through decisions in cases such as Twombly, the Supreme Court has begun to apply the Sherman
Act more strictly than before.37 There are understandable policy reasons for this narrowing. The
combination of private plaintiffs actuated by personal interests and broad legal theories that made
it hard to dismiss complaints at an early stage had worrisome implications. It could lead to inhibiting corporate exposure to treble damage risks and undesirable incentives to settle even non-meritorious claims. But the Court’s corrective narrowing means that some Sherman Act purposes may
now need to be protected through the uniquely governmental actions under Section 5.
34
Triangle Conduit & Cable Co. v. FTC, 168 F.2d 175 (7th Cir. 1948). This case is offered to illustrate the general jurisdictional principle; the
35
In principle one might believe that the “incipiency” application of Section 5 was intended to look further into the future than the “attempt”
substantive assessment of basing-point prices is a much debated topic on which no position is taken here.
provisions of the Sherman Act, but this distinction is too subtle for practical counseling. See Gen. Foods Corp., 103 F.T.C. 204, 366 (1984)
(distinguishing between these two theories would require “engaging in such fine distinctions as to challenge the legal philosopher, let alone
the competitor trying to conform its conduct to the law”).
36
See The Vons Companies, 115 F.T.C. 710 (1992) (consent).
37
See Bell Atl. Corp. v. Twombly, 550 U.S. 559 (2007) (ruling on sufficiency of the complaint and discussing the problems of “discovery
abuse”).
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In considering a case of this type under the proposed framework, a key issue for the FTC will
be ascertaining the intended scope of the underlying statute. Does the letter of the statute express
just the core prohibitions that Congress intended to impose most clearly, leaving the further development of those principles to a specialized and neutral administrative agency? Or does the letter of the statute (as interpreted by the courts) fully express the entire intent of Congress so that
any effort to expand on it would be contrary to the policy of the statute rather than in fulfillment of
it? Each of these situations will no doubt occur on occasion. The proper resolution of this issue will
therefore call for careful reading of the legislative history and the statutory scheme in the context
of the particular litigation.
Example 7: A petroleum company sells gasoline to its tenant service station operators who have
made investments to develop goodwill but whose leases can be terminated easily. The company requests that those stations carry particular lines of tires, batteries, and accessories. A tie-in
is not expressly demanded. The Commission finds, however, that the operators react as if an
explicit tying arrangement was in force. Section 5 can be used to enforce the policy of the
Sherman Act.38
Example 8: A savings and loan company participates in a director interlock that would be illegal if it were engaged in by a bank. A Section 5 action would not be proper here because
inquiry into the legislative intent would show that Congress deliberately intended to make a distinction between these two kinds of institutions.39
Facilitating practices. One violation of Sherman Act policy has received particular attention from
the FTC. These are facilitating practices, or forms of unilateral but parallel conduct that tend to
make it easier and more likely for an industry to arrive at a state of profitable oligopoly coordination. This conduct harms competition by materially facilitating interdependent conduct, and it can
violate the basic Sherman Act policy against horizontal coordination.
The challenge in such cases is less the legal theory than the factual analysis.40 Many ordinary
and beneficial business practices—such as published price lists and standardized product
sizes—also tend to make coordination somewhat easier. The enforcement challenge is to identify the conduct in which the anticompetitive effects predominate with the necessary clarity.
Example 9: In the interval before a competitive bidding process begins, a large supplier of
goods to a state government informs government employees of its likely bid price. The firm
anticipates that state employees will inform its competitors of that price, and this in fact happens.41 The FTC may challenge this conduct under Section 5.
Example 10: The firms selling a gasoline additive independently offer their refiner customers a
number of similar pricing terms. These include delivered pricing, long advance notice of price
38
Shell Oil Co. v. FTC, 360 F.2d 470, 487 (5th Cir. 1966); Cf. FTC v. Texaco Inc., 393 U.S. 223, 229 (1968) (system is “inherently coercive”).
39
Cf. Perpetual Fed. Savings & Loan, 90 F.T.C. 608 (1977), superseded by statute expressly immunizing S&L interlocks as recognized in 94
F.T.C. 401 (1979).
40
See Boise Cascade Corp. v. FTC, 637 F.2d 573, 578 (9th Cir. 1980) (“[T]here is not substantial evidence in the record, considered as a whole,
to sustain the Commission’s finding that petitioners’ delivered pricing methods stabilized prices in the plywood industry at supra-normal
levels”).
41
If the state employees do not pass the information to other competitors, then no Section 5 action should be brought. One might consider
attacking the firm’s conduct as an improper attempt at coordination. However, the conduct of independent state agents seems sufficiently
unpredictable, especially when compounded by the further unpredictability of the competitors’ responses, to preclude an inference of
attempt in the absence of actual effects.
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increases, and most favored nation clauses. Such features may sometimes tend to stabilize
prices. However, many of these features are offered here at the customers’ request, and service and safety competition is also important, so it is not clear that the practices have substantially harmed the net terms of sale. A Section 5 case would not be appropriate.42
Diversion of competition into less desirable channels. Competition may also be harmed in a
cognizable way if the primary terms of rivalry are shifted into some alternative form that is less beneficial or desirable to purchasers. This is unlikely to be a problem if the action is taken by just a
single firm. If other firms are forced to adopt similar behavior in self defense, however, then industry-wide competition may be damaged.43
Thus, if firms begin to compete with one another through bribery of purchasing agents or industrial espionage, for example, and to present fewer new offerings in terms of price and quality, then
competition may be harmed in the sense that the menu of options in the marketplace has been
diminished. Competition may also be diminished in the sense that allocative efficiency has been
harmed by shifting business away from firms offering better products or lower prices and toward
those using illicit means of gaining competitive advantage. Both these effects may occur even if
the firms are still competing against each other intensely within the altered terms of rivalry.
Example 11: A major manufacturer of municipal power generators bribes a city official to give
its next contract to the firm. This payment effectively excludes the firm’s competitors in the short
run and places them under great pressure to adopt similar practices in the future. The
Commission may challenge this conduct as a violation of Section 5.44
Example 12: A firm misrepresents the quality of the material used in its clothing. By itself, that
is an instance of consumer deception. If enough firms in the industry come under pressure to
compete through making similar misrepresentations, however, the conduct could become an
unfair method of competition as well.45
Cumulative harm to competition. In recent years the Commission has encountered business
strategies that do not rely on a single readily identifiable anticompetitive action, but that instead
harm competition through long-term combinations of methods. These strategies may rely on the
cumulative effect of many small but persistent repetitions of the same technique or on the cumulative effects of differing but mutually reinforcing techniques.
The introduction of such strategies may be a natural consequence of an increasingly complex
economy in which firms relate to each other in multiple ways. It may also reflect a calculated effort
by some firms to pursue anticompetitive goals through complex new methods that are more difficult for the enforcement agencies to detect, characterize, and prosecute.
Cumulative harm to competition may use a number of different tools. It may make use of conventional antitrust violations, contract breaches, deception, or exclusionary misuse of the regulatory process.46
42
Cf. Ethyl , 729 F.2d at 140–41.
43
See FTC v. R.F. Keppel & Bro., 291 U.S. 304, 312–13 (1934) (in the dated context of judging use of gambling techniques to sell candy to
44
Cf. Lockheed Corp., 92 F.T.C. 968 (1978). The undesirability of such conduct was confirmed by a legislative judgment. Cf. 15 U.S.C.
children “a trader may not, by pursuing a dishonest practice, force his competitors to choose between its adoption or the loss of their trade”).
78dd-1 et seq. (Foreign Corrupt Practices Act).
45
Cf. FTC v. Winstead Hosiery, 258 U.S. 483, 493 (1922).
46
A business strategy of cumulative harm is particularly suitable for assessment under Section 5, which allows the Commission to study new
industrial trends. And it lends itself to the Commission’s distinctive use of injunctive remedies that do not create an undue risk of private
damage actions before the industry has become familiar with the relevant standards. See FTC v. Gratz, 253 U.S. 421, 435 (1920) (Brandeis,
J., dissenting) (in novel cases, the Commission’s remedies ought to be limited to “prophylactic” measures).
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As a limitation on this theory, however, the Commission will not ordinarily take account of conduct violating those other regulatory laws that do not bear substantially on the relationships
between actors in the marketplace. Consideration of additional types of laws would create too
much risk of taking Section 5 beyond predictable limits or of creating conflict with another, specialized enforcement regime that may have primary responsibility for the topic.
Example 13: A dominant manufacturer of automotive electronics engages in a series of exclusionary practices. These include making misleading statements about the market readiness of
its own products, incorporating certain hidden software to degrade the performance of its
rivals’ components, and engaging in bundled pricing and tying arrangements. The Commission
may challenge the cumulative effects of this conduct as a violation of Section 5.47
Example 14: A mining company decides not to install expensive pollution-control equipment.
There must also be
This conduct may confer a competitive advantage on it in various areas of operation. The
Commission will not challenge this evasion of regulatory duties as an unfair method of comsome element in the
petition under Section 5, however, because doing so would create too great a risk of confusion
or inconsistency with the work of the Environmental Protection Agency.
conduct that makes
Other conduct harmful to competition. Finally, the Commission should have the ability to idenit wrongful or not
tify and challenge some new form of conduct that becomes harmful to competition.48 These occasions should not be numerous, however. The well-established applications of unfair competition,
properly competition
discussed above, seem sufficient to reach the great majority of situations that need attention, and
the agency should not pursue innovation for its own sake.
on the merits.
Element 2: Use of Wrongful Techniques
To make out an unfair method of competition, it is not enough to simply show that the conduct has
been harmful to competition. Many legitimate and beneficial business practices may also have
that effect. For example, a firm that properly obtains a patent has excluded competition. A firm that
achieves a monopoly through luck or superior competence may have done the same. Indeed, any
firm that makes a unilateral decision to drop a product line or to close a local outlet has to some
degree diminished competition in that particular area, yet that kind of exercise of business discretion has never been considered actionable. There must also be some element in the conduct
that makes it wrongful or not properly competition on the merits.
“Competition on the merits” is the end result contemplated by the consumer choice structure
of the FTC Act. It is the process whereby sellers make products or services available, and purchasers decide freely, based on accurate information, which they consider to be the best available offer, thereby rewarding the sellers who offer the more appealing products or services.
Conduct may be determined to be wrongful—in the sense of not being this kind of competition
on the merits—by reference to a number of different sources of guidance.
The letter of the antitrust statutes. Many unfair competition actions involve legal theories that
simply apply the letter of the Sherman and Clayton Acts. The wrongful nature of conduct violating those statutes is well established. The proper application of the statutory principles to a par-
47
Cf. Complaint, Intel Corp., FTC Docket No. 9341(Dec. 16, 2009); see also id., Concurring and Dissenting Statement of Commissioner J.
Thomas Rosch. This case was eventually settled by consent (Aug. 4, 2010).
48
See Cement Institute, 333 U.S. at 693 (Section 5 was intended to hit at every anticompetitive trade practice “then existing or thereafter
contrived”).
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ticular situation can always be disputed, of course. That is an issue involving the litigation of individual cases, however, rather than something that casts doubt on the general wrongfulness of
statutory violations in principle.
Extensions of Sherman and Clayton Act principles. Many other Section 5 cases are also grounded, in some less direct way, in the jurisprudence of the Sherman and Clayton Acts. They involve
technical gaps in those statutes, or incipient violations of their terms, or violations of their intended underlying policies. In each such case the principles being applied from the underlying laws
are still principles of competition, and so a violation of them is likely to involve conduct that is not
competition on the merits.
External standards of business conduct. Wrongfulness may also be suggested by the violation
of other, non-antitrust standards of business conduct.49 These will include such external references as deception and unfairness law from the consumer protection side of the FTC,50 contract
law,51 standards of honesty before other administrative agencies,52 and state business-tort law.53
The legislative history of the FTC Act makes clear that Congress expected the Commission to also
refer to these kinds of sources when defining unfair methods of competition.54
These external standards were not necessarily written to serve competition goals, and so a violation of them does not automatically make out a violation of Section 5. The conduct must also contribute to anticompetitive results within the meaning of the FTC Act. When it does so, however, then
the fact that the conduct violates external standards will strongly suggest that it was a wrongful
form of competition.
Other. Finally, some conduct may not fit neatly into any of the previous categories but may be
found to be wrongful by reference to the underlying principle that it does not involve competition
on the merits.
Element 3: Harm to Consumers in Net Effect
The third element in finding an unfair method of competition should be that the conduct is harmful to competition and consumers in its net effects. It is a showing that the conduct is harmful under
a rule of reason balancing test.
The Commission has long recognized that many business techniques produce both costs and
benefits to consumers. A merger may lessen competition but also increase productive efficiency.
49
Here again the Commission should limit itself to considering just those external standards that bear on the proper relationships among market participants rather than looking to regulatory laws more generally.
50
Xerox Corp., 86 F.T.C. 364 (1975) (misrepresentation of dates when new products will be introduced); Cf. Complaint, Intel Corp., FTC Docket
No. 9341 (Dec. 16, 2009) (alleged intentional misrepresentation of product performance). As a matter of resource allocation, the
Commission most often uses its consumer protection authority to protect small businesses and individual persons as purchasers. The
Commission’s mission under the FTC Act is to protect the integrity of market processes for all participants, however. Larger corporations
also depend on the integrity of those processes, and Commission action may sometimes be needed to protect even those firms in their role
as purchasers.
51
Cf. Orkin Exterminating Co., 108 F.T.C. 263 (1986), aff’d, Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1367 (11th Cir. 1988) (firm breached
over 200,000 service contracts, supporting a finding of consumer unfairness).
52
Cf. Unocal, 140 F.T.C. 123 (2005) (misrepresentations to state air-quality board put firm in position to charge monopoly prices) (consent).
53
Cf. Americo, Inc., 109 F.T.C. 135 (1987) (frivolous legal claims intended to delay a competitor’s reorganization in bankruptcy) (consent).
54
“[I]t will be the duty of the [Commission] to consult the decisions of the courts, the learning of the time, the custom of merchants, the habits
of trade, the writings of studious and thoughtful men, all of which go to make up our understanding of the words ‘unfair competition.’”
51 C ONG . R EC . 13,048 (statement of Sen. Alfred B. Cummins).
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A vertical restraint may lessen competition within one distribution channel but enhance competition with other firms that utilize other channels. In enforcing Section 5 under this framework, the
Commission should apply the statute in a way that considers all relevant costs and benefits and
condemn only those practices that are harmful in their net effects.
In taking such a view here, the Commission would be consistent with the construction that has
been given to “unfair acts or practices” on the consumer protection side of Section 5. The
Commission has previously issued a policy statement describing the elements of a consumer
unfairness violation. There the agency concluded that “the injury must not be outweighed by any
offsetting consumer or competitive benefits that the sales practice also produces.” 55 Congress
subsequently concurred in that construction. It added a new Section 45(n) to the FTC Act that codifies some aspects of the consumer unfairness statement and specifies in particular that a practice cannot be found to be unfair unless it causes a substantial injury “which is . . . not outweighed
by countervailing benefits to consumers or to competition.” 56
When efficiencies are presented as part of this analysis, the Commission should consider
them to be highly relevant. They should therefore be supported by appropriate empirical evidence, when such evidence is available. The Commission should ordinarily require that the firm
engaging in the challenged conduct demonstrate something beyond a theoretical possibility that
efficiencies will be realized.
The small exceptions to the rule of reason only streamline and clarify the general principle.
Some conduct may be condemned on a per se basis, not through the operation of Section 5, but
rather through the operation of some other, underlying statute. Thus, if the Commission were to
pursue a price-fixing case, applying the letter of the Sherman Act, it could apply the per se condemnation of the Sherman Act.57 This treatment really only reflects the judgment, based on the
long experience of others as well as of the Commission, that such conduct will always or almost
always be harmful in its net effects.
A Fourth Consideration: Predictability
Predictability is not, strictly speaking, an element in this proposed framework for defining an
unfair method of competition. Congress anticipated that the Commission might have to address
new forms of conduct and establish new principles of competition. It did not intend the
Commission to consider itself constrained by the de novo nature of an action. Senator Cummins
was opposed to the inclusion of criminal penalties in Section 5 precisely because it might
“become[] necessary in order to preserve competition that we shall prohibit acts which have
heretofore been regarded as moral, which have heretofore prevailed in every industrial society in
the world.” 58
55
Policy Statement on Unfair Acts or Practices, appended to International Harvester Co., 104 F.T.C. 949, 1070 (1984).
56
15 U.S.C. § 45(n).
57
See N. Tex. Specialty Physicians, 140 F.T.C. 715, 719 (2005) (case applied an “inherently suspect” standard, but could have used per se
theory); see also Grand Union Co. v. FTC, 300 F.2d 92, 99 (2d Cir. 1962) (when using Section 5 to fill a technical gap in the Robinson-Patman
Act, the FTC should apply a per se standard if the underlying statutory provision is itself per se).
58
51 C ONG . R EC . 11,539 (1914). Even the court of appeals cases that expressed concern about predictability also suggested that if the facts
had more clearly shown an actual harm to competition, then the factor of predictability would not necessarily have prevented a challenge.
See, e.g., Ethyl, 729 F.2d at 141 (“Perhaps this argument would be acceptable if the market were clearly as described and a causal connection
could be shown between the practices and the level of prices.”).
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Even if not required in every case, however, predictability is an important goal and one that the
Commission should strive to advance in its actions. Fostering predictability contributes to sound
governance in several ways. It assists the majority of law-abiding firms in their efforts to comply
voluntarily with the law.59 And it recognizes that even injunctive remedies under the FTC Act can
impose real costs on the firms involved, either in the form of harm to reputation or in the transactions costs involved in changing to a different mode of doing business.
Predictability should not be a problem in the great majority of Section 5 cases. The legal theories will be based on concepts and extensions drawn from the Sherman and Clayton Acts, as discussed above. Most extensions will be limited. Firms wishing to keep clear of legal issues should
usually be able to do so by avoiding the kinds of conduct that might have led to Sherman Act
questions.60 Moreover, if some non-antitrust standard, such as a business tort, is involved as well,
Even if not required in
then the conduct would be known to be wrongful even if the antitrust issue in a particular case
might have been hard to anticipate.
There always remains the possibility that changing business conditions will make it advisable
every case, however,
to challenge some form of conduct that had previously been considered legitimate and proper.
predictability is an
The Commission can draw on several techniques in order to deal fairly with this circumstance. It
may rely on the intrinsic characteristics of the challenged conduct to provide notice. If conduct
important goal and one
tends to lead to anticompetitive coordination or exclusion and if it was undertaken without the sort
that the Commission
and their counsel should generally be aware that the conduct is questionable. Or if these intrin-
of valid business purpose or efficiency benefit that might justify it in a balancing test, then firms
sic characteristics seem unlikely to give fair notice with respect to a particular business practice,
should strive to
then the Commission may delay formal action until it has had a chance to make its views known
advance in its actions.
ing through informal avenues such as speeches, articles, and congressional testimony.
in some other way. For example, it may give the business community advance notice of its think-
Conclusion
To sum up, the “unfair methods of competition” authority under Section 5 serves three broad purposes. First, it authorizes the Commission to enforce the ordinary standards of the Sherman Act.
It thereby ensures that the nation’s competition agencies have broadly similar jurisdictions and
apply broadly consistent laws.
Second, the unfair competition authority enables the Commission to go beyond the letter of the
Sherman and Clayton Acts, and to address different or emerging forms of anticompetitive conduct
that those statutes do not reach. The powers uniquely conferred by Section 5 are defined and constrained by the essential elements discussed in this policy framework. A Section 5 violation should
involve a harm to competition, business conduct that is wrongfully different from competition on
the merits, and a net injury to consumers. Predictability is an important additional consideration.
And third, the competition authority under Section 5 serves a central function in integrating the
variety of different laws that govern how firms manage their competitive interactions. Such laws
are numerous, including not only the competition statutes, but also laws on deception, consumer
unfairness, contracts, and business torts. Section 5 does not impede the operation of those other
statutes or needlessly duplicate their coverage. It does, however, help to fill in any gaps between
59
This factor was important in several court of appeals opinions in the 1980s. See Ethyl, 729 F.2d at 139; Boise Cascade Corp. v. FTC, 637
F.2d 573, 582 (9th Cir. 1980); Official Airline Guides v. FTC, 630 F.2d 920, 927 (2d Cir. 1980).
60
For example, it is only a short step from a theory of actual but tacit agreement, proved through the circumstantial evidence of conduct
(Sherman Act), to a theory of parallel unilateral facilitating practices that lead to oligopoly outcomes (Section 5).
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them and helps the enforcement of each to draw insights from the others. This helps move our
trade laws toward a consistent vision.
The Commission’s construction of its unfair competition authority should ultimately be guided
by the setting of that provision within the larger context of the entire FTC Act. Procedurally, that Act
provides for an administrative process that does not include either private actions or monetary
damages and so the agency should construe its authority in a way that gives itself appropriate
latitude as the subject-matter expert in its field. Substantively, the Act gives the Commission the
overall mission of preserving a free and open market economy that provides fair opportunities for
businesses and that is responsive to consumer demands. The agency should view its unfair competition authority within that broader framework and construe it so as to protect market options
from any unreasonable harm, thus protecting the competitive process as a whole. 䢇